headlines from around at globe, hsbc will post its first quarter figure mis-15 minutes. expected to have a profit of nearly $6 billion thanks to renewed strength in its investment bank. and australia's labor government gets set to release its national budget. the country aiming to be the first majored developed economy to get back to budget surplus after the global crisis. >> and 3.2 billion euros for a 28% stake in the dutch telecom

firm kpn. >> and toshiba sees a much more profitable year ahead thanks to demand for memory chips this apple products. european stocks as you can see pretty much in the red across the board this morning. ftse 100 closed yesterday. currently down about a third of a percent. dax still not trading. they've had a technical glitch. but yesterday up around 8 points. the cac 40 down 1.6%. the cac yesterday up 1.65% despite results in the french election. in terms of stocks, kpn up

nearly 18%. offering that stake. and keep your eyes on that. and may pave the way for a spanish bailout, a rescue, which suggests the country could then show investors, yes, we are getting our sector in order. bond markets, we saw just about record yield lows yesterday. yields still moving higher. still below the 6% that we hit a couple weeks ago. italy, still below 5.5%. we'll keep our eyes on that. we'll show somehow you what's

going on with the currency markets. >> and take a look at the asian map here. a little bit of recovery will if some of the markets, but the losses extending through. sensex down quite heavily. there was some recovery in japan. the boj apparently bought about 5 million worth which is a record to prop up the market on monday, but ultimately didn't do much given cautious investor sentiment out there. and australia trimmed most of its gains. so the picture hooking quite complicated. people wondering why impose

austerity. so far bond yields looking quite rich. a lot of people wondering whether 3.44 for the ten year notes is about if fact close to 60 year lows. >> kpn stock much higher after the stake offer. offering for up to 28% kaub stake. represents a r50e78 yum of around 23% to the closing price yesterday. the firm cfo quit in january and the company's currently under investigation in the netherlands for price fixing. joining us for the next hour, chris, i've read your reports and you've always said this is a

deep valued play. a few are presumably blacked by carlos shrill. what do you you make of the news? >> what we try and do is whine we're looking at the stocks out there for investors to be involved with, we try to identify those that are in play from a trading perspective, but also the long term value opportunities. warren buffett said your decision to die buy is what you think it's worth than what the share price is of the day. and what slim has identified clearly if he's going to be expand manage to europe, kpn is an undervalued asset. >> what makes it an undervalued asset? >> it's about the longer term valuation drivers of earnings.

we estimate those valuations on a daily basis and we can see that the stock was trading at a significantly undervalued level and we saw it as a situation where about if you wanted to know where you could get paid to own the stock, there was a significant discount and value will reappear through time. it may or may not be a corporate action, it may simply be that the rest of the investment community recognized where value is starting to emerge. but cheer value is emerging in its cash flow and he earnings outlook. but the longer term is 25 percent above the share price. >> is it different came today post the stock jump some. >> i think we're seeing a situation where an awful lot of risk is in the price. these movements allow to us realign the two things more

closely. it's certainly not overvalued. but just recognition of the fact that value investors do get the recognition of value occurring and this is the trigger for it. >> you've been holding the stock. >> deep value long. it's something should you have in your portfolio. >> hollande is already feeling the pressure. a number of reports suggest he's being urged to uphold europe's budget pact. and greece may be headed to fresh elections after the shock vote that produced no outright winner. conservatives failed to form the consensus handed it to the second in the polls.

some lawmakers doubt the negotiations will produce any agreement. carolyn, what's the betting, are people suggesting that elections are more likely than any agreement? >> you're probably item there. that's because greek political parties have until may 17th to form a unity or row a ligs government. as you said, the rad ral left had three days, but it already said it doesn't want to work with new democracy. or pasok. the communist party said it doesn't want to work with the radical left. so a lot of horse trading going on behind scenes. if they fail to create a coalition government, the mandate goes to the socialist party. but again, about this fails by may 17th, the parties will have

to form a tech know accurate tick government and call for new elections. so the future for greece is very unclear and many analysts has been pointing out that greece doesn't really have time to call the elections because it's essentially running out of cash by the end of june. at that point, it wouldn't be able to pay civil wages, it wouldn't pay wages and that would entail social turmoil. also want to point out greece still needs it on detail some 11.5 billion euros in spending cuts for 2013 and 2014. these will have to be signed off by the eu and imf by the end of june, as well. so time is really running out here. >> okay. that's the latest out of athens. and stefane is in paris. a lot of pressure coming from germany to try to tell hollande what he should be thinking about

fiscal impact. what are the noises? >> yes, we need to wait for the official statement toness at proposal made on sunday. if you remember, on sunday hollande called for a growth agenda at the european level. yesterday spokesman for the german chance lore he replayed that berlin would not accept renegotiation of the fiscal compact which has already been approved by 25 countries in europe. he also indicated that germany would not approve any growth thish difference in europe that is based on the initial deficit. berlin thinks that only structural reforms could boost economic growth. so that was the answer even before hollande travelled to berlin. that can said, the negotiations will likely be difficult between paris and pberlin.

both sides are trying to calm things down to make it this new relationship working. on the french side, hollande said he was very much tamped to the franco-german relationship even if it was too exclusive. some companies felt they were not part of europe. we had an answer from the spokesman of the germans slans lore and confirmed that hollande would be welcomed by merkel with open arms. so they're trying to prepare the ground for negotiations that are likely to be difficult. we had some comments yesterday from the from the president of group. basically said that the german position was the right one, austerity should be the key word in europe. he believes the fiscal compact should not be renegotiated.

and that being said, he believes will is room for growth initiative in europe. >> stefane, thanks for that. chris, how have thinged changed for investors post the weekend? >> i think we ran in on the weekend with an awful lot of uncertainty about what could be the result in france. we thought there would be more of a reaction, but i think the realization is that it's how merkel reagents to the landscape in france with the french locations being coming up next month. i think greece will be put to the side until we get clarification. you only have to look at the interest rates to realize what's going on in europe is the landscape is changing already. the permanent cost of capital is

not unified. we're having to manage in what's actual hey slow crumbling of what the euro is all about and i think investors are beginning to become much more country focused. if you look at what french investors are doing, they're investing if french bonds and assets. there's a realignment much more along country lines. i don't see german retail investors thinking there's any reason to invest in greek equities ever. and that's really what's starting to happen is people are becoming more narrowly focused. so probably why we've had a little bit more of a muted reaction because we're not looking for a big collapse

crisis environment in the same way that we feared before christmas. >> will greece have to leave the euro? >> you could bring up a number of probability estimates made would i economists on people leaving the euro for the last 3 1/2, 4 years. the reality is it's a binary decision. if greece gets itself to the point where the european administration says we can't play this game anymore, we know that starts a series of dominos falling over. the greek authorities recognize about they're going to remain part of the european area, they still have to try to play the european game. not playing anymore is not an option. sdl we're about to get numbers

from hsbc. so let's expand the panel. paul, good to see you. and daniel steward, as well. we expect revenues up around 7%. what's going to you are your focus? >> one of the key things for me is customer loans. last year customer loans were down 2%. so stewart gully ver who came in as ceo has set out two or three key strategic targets. we think of it as being emerging market exposed and the growth ban bank. >> hsbc pretax underlying

profits up 25% squared with q1 '11. $4.3 billion. underlying cost efficiency, improved from 58.7% to 535.5%. loan impairment charges 2.36 billion. says it's that good progress will this all areas of strategy including sustainable costs savings. i was looking for a profit per share figure which we don't actually have yet at the moment. >> they have a long term target of bringing it back to 48%. a number that they achieve on the global market side.

but that was getting way out of kilter towards the end of q4 approaching 58%, 59%. so it's a step back in the right direction. but 48-52% is the target. >> return on achblgverage 6.4%. what else do you want to know from them? >> i think that the key for me on the dwloeb al market side is that the fourth quarter 2011 was a shocker. it was a very poor period for security markets overall. but towards the end you had the ltro program coming in and since then markets have been on a charge. so we're expecting that the securities division has seen maybe a doubling in profit able for the first quarter compared to the first quarter. all it does do is brings it back

to a comparative performance to will this time last year. so a bit of a v shape. >> 55.5. >> it can be a little volatile and the key targets set out a year ago were cost income ratio 48 to 52% by the end of 2013 and roe target of 12% to 15%. the market realized in q3 and q4 they would be difficult to achieve in q4, the ratio was up, seems like a reasonable performance, but some way to go still to get that down towards 48 to 52%. >> shares have turned around slightly. they were down 1.about8%.

and now just above. if you're an investor, what are you looking at? >> hsbc is one of the few banks in the investment environment for european invest ors which hasn't suffered the crises of last year and it tends to be one of the stocks that rallies when there's a relief in the sector. it's not a bank where investors have seen something very cheap and tends to be a stock for us that when it ask have a rally and a bounce, we suggest people take money off the table rather than stay and wait and buy. tends not to get very oversold and if it does, it's across a broader macro background. it's not a stock that investors are looking to buy because they see it as a real investment

fund. financials have been that oversold very risk level investment decision. financials have been lifteded. it wasn't stuck in that european bank nightmare box. they tend to -- hsbc tends to move in the broader market. >> hsbc is a safe haven if you want to own a bank now. if you want a good play to equity market, we would look to barcl barclays.

>> you would suggest there's no reason to own it, avoid the bank sector you can you think there's going to be a rally. global hanging market net operating income 5.62 billion. >> and that does swing around and will do again. so it in terms of projecting forward, there is quite a lot of hsbc profitability that is highly vulnerable to market conditions which as we know are vulnerable at this stage. >> chloe. >> how can this hsbc turn into a growth stock given that will are changes under way? if you take a look at the new outcome from the sm echl d, foreign banks can actually up

their stakes by up to 49%. could that change in the kind of investment deals and kind of trading fee incomes that they might get? >> that change has to provide strategic opportunities for hsbc and standard charters alongside other international banks. it's a question whether it can become more of a growth bank. one of the strengths for hsbe has been the subprime mortgage business. but, yes, those changes as regards ownership do offer

bigger and faster growth opportunities. >> thank you very much. good to see you all. still to come, spain is reportedly looking to inject up to 10 billion euros in its trouble lended bank, but will it be enough to stave off the threat of a bailout.

that's a new plan to clean up the spanish banking sector which could be unveil order friday. it follows the resignation yesterday of the banking chairman who is also former managing director of the imf. reuters suggest sources saying rescuing it will involve between 7 and 10 billion euros. this comes as spanish media say it may help troubled banks sell

toxic asset. a number of incentives will be considered. european commission may push back the deadline for spain to reach its deficit star gets for a year. could give them until 2014 to reach a 3% deficit target that was originally set for 2013. should we worry more about france or spain? >> i think what's happening in we've consolidated all the cases, having to be recapitalized and refunded, talking about the use of taxpayer funds to do this. and it's an example of how time

operates to the benefit of the authorities. if you leave things long enough and you're able to keep things going long enough, we are slice and dice and take issues away. the bad bank concept has ultimately allowed the system to get working again. spain's biggest risk was that the fnkts system had seized up and nothing was happening. ecb involvement has enabled us to take a step back and z adding the housing sector issue ps as far as sfrans concerned, it's a political level where the risk of creating fragmentation with germany is what people are worried about. spain has a backing snk that there's all sorts of who are rows still to appear. so equity investors in particular, there are great opportunities in spain. particularly in in the banking

sector. #. >> so a lot to uncover still. thanks for that. >> and today, do long rides tire you out? you soon may be able to sit back while sitting behind the wheel. stay tune and find out how. ♪ ♪ why do you whisper, green grass? ♪ [ all ] shh! ♪ why tell the trees what ain't so? ♪ [ male announcer ] dow solutions use vibration reduction technology to help reduce track noise so trains move quieter through urban areas all over the world. together, the elements of science and the human element can solve anything. [ all ] shh!

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hsbc shares reverse losses after biggest bank beats estimates by a billion dollars in the first quarter. >> australia's government gets set to release its national budget. the country aiming to be the first developed economy to get back to a budget surplus. >> elections loom large in greece after they fail to form a coalition. analysts doubt they'll garner enough support. >> and power up. toshiba sees a much more profitable year ahead thanks to

unrelenting demand for memory chips in apple products. >> australia will be the first to return to a budget surplus, but economists question the need for a surplus so soon. matthew taylor will give us a preview. we saw the markets trims its earlier gains. how much heavy lifting will the rba have to do? >> it will put the emphasis back on the reserve bank with the government going on a massive round of spending cuts to achieve that budget surplus of

about $1.5 billion or so. for this fiscal year, we're expecting to see the deficit come in at about $40 billion, so they've really got a lot of heavy lifting to do to get the budget from that $40 billion deficit to a surplus of about $1.5 billion. this will be one that's based on labor party values and it will include the deeper spending cuts in around about 25 years. expecting to see about $1 billion doubt from the executive living away from home bonus and also from golden handshakes. but a real center piece is that the government will scrap its promised 1% cut to company tax rates, this promised at the last election. and this is to be funded by the controversial mining tax. vels, they're not going to embark on about a $5 billion

spend to bol sder the savings of lower and middle income earners through a number of left sump payments. earlier we heard from the treasurer, wayne swan, before he went into that budget. and here's what he had to say about the budget. >> coming back to surplus is about making sure we help those people sitting around the kitchen table when they're figuring out how to make ends meet. additional support in this budget for low and middle incomes, but also making sure we give maximum flexibility through monetary policy. >> so the surplus will

incrementally move up as the years progress through the forward estimates, but also this $5 billion spend really i guess if you're cynical, you could say it is a pitch to those voters that are on struggle street with cash payouts ahead of the next election which of course is set to a place next year. >> yeah, that really seems to be the key point. but interestingly must have, the australian dollar seems to be holding unreasonably well. let's get to our panel now. how much is really about political adjust ters given there are no market stressors unlike in europe and they're forcing it on to themselves? it's very critical, they might lose that one seat majority in parliament.

>> this is 95% politics. economics has very little to do with this. whether we chief a surplus in five mints or two years, that is not a here nor there to the ratings agencies. this is about the political capital and today we get a surplus next year. >> i couldn't agree more. i think will this is a pure electioneering. masquerading as economic prudence. i think the liberals have pushed the labor party into this position after they've effectively spent the surplus they inherited and trying to make lil capital out of a sur husband. hard to ch achieve because they won't meet the revenue projections. and the market is largely cynical. so i don't expect to have a big impact on the currency market or

the aussie dollar. whether it can steer the economy is debatable, but i think the economic decision is wrong and it's too early in the recovery cycle. >> already there's been some suggestions that the budget will forecast trend growth of about 3% to 3.25% going forward, but whether or not that's sustainable with the headwinds coming there europe, what happens in china, remains to be seen. >> and i think the budget is based on fairly optimistic outlooks.

labor values are not necessarily consistent and i don't think the market this welcome the injection and there will be much more concern with about the threat of not having the corporation tax that we were expecting. and that could yubd pin or threaten investment in australia going forward. >> everybody is concerned about the growth picture. maybe the underlying demand picture isn't on soed with a, but some think the mining boom could have hit a stumbling block. >> one reason we saw the trade deficit was because of a double digit rise in capital goods imports. but unfortunately, lining investment doesn't generate jobs and spread the wealth.

and the consumer spent much higher than expected in the first quarter. so maybe the two economies may be converging a little. and what's missing is housing and thousand we're seeing a 50 basis point cut and certainly more to come. so housing may join by year end, as well. >> ross? >> i want to bring chris in. how do investors view australia? >> in a consistent valuation approach, what we've noticed in the last few days or so is the number of australian stocks now coming up as trading cells as red stars flagging up, there is a lack of value opportunity there. the big issue is the aussie dollar. if you see the message coming through from the budget and also

rate cut, if the aussie dollar starts coming off, it's the flow -- >> do you agree there's less value in australian stocks? >> that's not my strong case, but what is the case is the perception that australian stocks are all about mining and resources when in fact they're about services to mining such as travel and low guess ticks and also about the banking and finance sector which are both in particularly good shape. so while there may be question marks, we saw bad risk off moves will week, so we have seen some swings and roundabouts. but i think it's a bigger reflection of a broad based economy and i don't think necessarily a sell.

>> talking about the australian dollar and given the amount of stimulus that will be coming out of the australian economy through the spending cuts that the government is embarking on, the biggest round in 25 years, the rba will have to do a lot more of the heavy lifting now. we saw that 50 basis point rate cut last week. what are you now predicting we'll see by way of interest rate cuts going forward given that all of the spending will be coming out of the australian economy from the government side? >> just to make a brief point of differentiation, we're only expecting another 25 basis point cut in the next couple of months. and there could be risks of more. but at present, pricing 100 basis points of cuts. so it's not about what analysts think. it's about what the markets is priced in. and there was an overreaction to the greek and french elections and there was a slight overreaction to the u.s. payrolls data on friday night. so even if we do see a rate cut

or two from the rba, that's actually better than what the ois strip has priced in. so i think the aussie dollar is on the oversold side. >> we'll look out for the announce moment just under an hour's time. matt, thank you soech for that and we've got it say good-bye to a annette as well as thomas. we thank you both so much for your time. and we'll be getting out to matthew taylor in just under an hour to bring that australian federal budget announcement. >> just remind you the xetra dax has resumed trading. there was a technical glitch this morning that stopped it. they may have wish that had it still wasn't trading because we have it coming down around 2/3 of 1%.

patricia has more of an update. what was the problem? >> technical glitch. it just didn't happen. somebody to got to switch it on, i guess. about 10:15, started kicking off trade here and the outperformer is deutsche pos. very good outlook confirming the outlook for 2012. ambitious yet realistic. looking for anywhere between 2.5 and 2.6 billion euros. very upbeat for also 2013, all thanks to asia. the market especially in the express delivery business is hot over there, it's not going to come down either. new contracts with different countries such as australia and japan. this is exactly where dhl makes their money especially automotive sector as well as

pharmaceuticals. and if you look at the share price currently trading at 14.45, pan takes tech rally, up about 30% after the last six months, but if you look at the actual valuation vis-a-vis the competitors, they're still cheap. the latest numbers i have here is that deutsche post is trading at a 10.9 times forward looking multiple. u.p.s. at 15.3 and fedex at 12.2. so they're much more expensive than deutsche post and by the way u.p.s. disappointing on their numbers and fedex even warning on their forward looking profits. >> all right. thank you so much for that. and let's talk about what's happening in india. new deli's decision to delay the start of its new anti-tax avoidance rule until next. indian government has yet to

explain how the deal will affect sales of phones. let's get out to mumbai. >> the general anti-avoidance treaty was one amount of taxation or legislation which actually created quite a stir in the endian markets. yesterday the finance minister had clarified on on the gaar with regards to certain amendments and what we can expect. one of the key important things is that now it has been deferred and it will include a representative from the law ministry and that will you willy formulate certain amount of policies in which we can expect a certain amount of recommendations that we can take forward for gaar going forward. a couple of key points is that the onus of representation or the onus is thousand on the

authority to actually prove the place from where the transaction is emerging and when or not it will be implemented or come under gaar. that is an extremely important clarification that came in. also a certain amount of other important things which have been announced which is the ability to approach the authority on advanced ruling going forward. that means about they approach with regard to advanced ruling in order to understand if they are breaking any law or whether they do fall under gaar going forward. with regards to the phone tax, there is some amount of lack of clarity on a lot of issues which tax people are still talking about and one of them is whether vodaphone does paul into the amendment or not. the finance minister was tight lipped with regards to the indirect taxation ability and

amendment which is came. there is a case which indicates if closed cases don't come under the purview of the committee, then does vodaphone fall in that purview or not. back to you. >> it will boil down to which jurisdiction that will fall under. thank you so much for that. and coming up next, do long drives tire you out? well, you will soon be able to sit back while sitting behind the wheel. stay tuned.

chris, we talked about kpm earlier. let's run through some other stocks that are in that category you think of deep value and your broker is recommending. >> one of the examples we mentioned earlier was how something that had become very out of favor was generating value. if you look at a stock like total, you have news around the gas platform and an awful lot of negativity built into the price. people are not able to run stocks with a perceived but no risk. and i think as those risks

unwind, investors have great opportunities to take two steps back and say if something is very heavily sold down as the gust settles, these are often the stocks that you want to have a look at. >> what's the difference between value and price? >> the price as i see it is a combination of value and risk. so if there's an awful lot of risk built into a price, means you're trading at a big discount to value. risk itself does tend to normalize over time. either the value falls because the risk materializes or the risk unwinds, worst case scenario doesn't happen and the share price moves back to value. that's the premise about why making investments when nobody wants to own thing because the risks they can't a if you've got a long enough investment horizon, you can take. as long as you're aware of where those values are and what's happening to value, you can always take that decision and be counter cyclical to a very short term trading market and you can see what happens for example in the french equity market end of

last week. p share prices went down not because value changed, but risk uncertainty meant people didn't want to own assets that had a potential political overlay. >> take profits even about if you're been holding it. >> and the point is just because you invest in something doesn't mean you cannot be relatively actively trading the opportunities that are 24r. wh when you see values no longer rising, you're then running a risk of not taking profits. and that's what we're always wanting investors to recognize is if you know where current value is and you knew where longer term value is, your risk return decisions are made against that backdrop. and you can't just have a value take's theoretical and out there and you never revisit. you have to to recognize that value and risk are two sides of the same investment decision.

and for example risks rise relative to where they were, dell larue will start giving back some of the recent gains and we're saying take profits. kpn is a value stock you have to own. >> okay. chris, thanks very much for joining us. good to see you. we still have a whole hour of great programming to go and to help us alone, jackie joins us state side. good morning. >> good morning. scott thompson says he's sorry for mistakes about his educational background this his official bio. he made the apology to n. a memo to employees monday. dan lobe pointed out thompson received a computer science degree in college when turns out highway didn't. lobe is fighting to get his own slate of directors on the board and is demanding thompson's resignation. reports saying yahoo!'s board met monday afternoon to discuss the matter.

taking a look at shares, lower would i abo by about 0.6%. also electron he can arts profits more than doubled. but ea lost 400,000 subscribers for its star wars the old republic online game. the company has invested more money in to star wars than any other game this its history. estimates are as much as $300 million. analysts saying people are playing the game, but not staying with it. so we saw ea fall 5% in the after hours session. in frankfurt down nearly 7%. and just like a teenager, google gets its license to drive. nevada has issued the company a license to test a self driving car on local streets and highways. last year nevada passed the first law about to the company to allow testing of driverless cars as long as there is still someone independent will the wheel. google began developing the vehicle a few years ago.

a human driver can retake control of the car by stepping on the brake or by turning the wheel. i don't know, guys. sounds very interesting, but i enjoy driving myself places. i'm not sure i'm ready to hand it over to google and a driverless car. >> big question is where does the argument take place. why have you taken will this route exactly is this because it's the way i always go. >> sounds like something out of an experience, ross. wonder what goes on once you get off air. >> there's those little discussions you have between two people in a car about the way you're going. >> yes, discussions. >> and stopping for directions. >> i'm not a -- at least you can take control of this when you want. i'd probably take control from the beginning. >> but you do need to physically be there. i kind of prefer the chauffeur

style, hands off. >> jeevess. sdwh n >> not necessarily sitting behind the wheel. >> jackie, what else is coming up? >> yeah, we'll leave the driverless car discussion there for the moment. coming up on the show, the u.s. faces the prospect of a lame duck congress following this winter's presidential election. but our next guest says could be the lame job markets last hope. [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale.

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hsbc shares reverse losses and the brank says it's make significant head way reducing costs. >> and in the u.s., morgan stanley warns it may have to cough up a lot more cash to cover the impact of a possible deep downgrade by moody's. >> and power up, toshiba sees a much more profitable year ahead thanks to unrelenting demand for flash help other chips and apple products. >> you're watching "worldwide exchange."

great to have you with us this morning. let's take a look at the u.s. futures, see how we're setting up for trade on wall street. looking at a lower open. the dow would be lower by 70, nasdaq by 16, and the s&p 500 by 9. this after we saw a mixed session on monday. of course the futures indicating yesterday a lower open and that is in fact what we got over concerns about europe after seeing those election results. but we did largely shrug that off. we saw the dow down by 30 on the day, nasdaq and s&p posting slight gains. and i want to point out key levels for our markets here. the dow just around 13,000. again, the nasdaq slightly under 3,000. and the s&p 500 hovering around 1370. a key technical level there. so it seems like we're making progress here in the united states, but about some ways we're treading water. how is it in europe? >> ahead of the u.s. open we're weighted to the down side.

8:2 on the stoxx 600. xetra dax closed for glitches this morning. wasn't showing prices. now down 2%. ibex down around two-thirds. maybe the sort of reactions we might have expected this time yesterday that we didn't get. we have heard from a number of companies reporting. hsbc beat expectations in the first quarter, have an underlying profit of almost $7 billion. europe's biggest bank boosted by rebound in investment banking income, as well as a fall in bad debt in the the united states. it's trying to ensure investors it has made good progress on all areas of its strategy including cost savings. >> meantime who are began stanley says it will have to cough up an extra $7.2 billion in collateral if moody's cuts the bank's credit rating. in february, moody's put morgan stanley and other u.s. banks on review for a possible downgrade citing issues in their capital

markets business. could be cut as much as three mo notches. could hurt their derivatives business, as well, analysts saying fixed income revenue could be cut by a third. taking a look at shares of morgan stanley, they are up nearly 3%. joining us as our guest host for the next hour is ken arcadian. great to have you on the show. let's talk about the financials. we just came out of the weekend meeting from werk sure hathaway where warren buffett said that the structure of the banks here far better than what we're seeing for example in europe. yet we are still concerned about morgan stanley. so let's talk about the health of the financials right now. >> sure. bank deposits are really up as far as the bank balance sheets go. banks are probably in the best position in the united states than they've been in in decades. they certainly got the wake-up call being the epicenter of the problem in 2008 and the focus of all that capital and bailout money that they have's paid back, but certainly a lot of

savve put into that wound. so not surprising. they got the wake-up call. i think we may hopefully get clarity after elections and shall other events going forward. they'll start loosening up some of the money so it trickles out in to the economy. >> and that's the question as you said that they might sort of loosen the reins and put the money out there. the question of financials is really one of growth. so do you expect to see them to start to bring that growth back as the u.s. economy starts to see signs of a recovery? >> no, but i don't see it as outpaced growth. if you're looking to play financials, i'm not so sure i see it there. >> but it's been pretty hot will year. >> i think we've seen some of that play already out there sparse the financials leading the way. but i think we'll start seeing the market broaden out a bit.

with the lame duck congress, some of the extraneous stuff for the financial world which is taxle policy and other types of things that affect them. but i wouldn't be afraid of them now, but i wouldn't be overloading them in a way that says that's where i'm making high bet going forward. good okay. we'll leave it there for the moment. we'll come back for more of his opinion throughout the show. >> thanks so much for that. let's sick to the financial theme sector here. barclays also reportedly on the prowl. the south china morning post reports that the british bank is looking for a mainland partner to help set up an investment bank in the world's number two economy. it says barclays is considering horn a dozen chinese securities firms to team up with. this follows beijing's latest drive to open up the financial services sector to foreign investors. >> and politics still very much in focus. reports suggest hollande is

being couraged to uphold the budget pact and we may be having fresh election mis-greece after the shock vote over the weekend that allowed no outright winner. we'll get over to stefane in paris, but first carolyn is in athens. so what are the odds on fresh elections and if we can't agree, how soon would they be? >> well, a lot of it depends on when the leader of the radical left party will back down from his opposition to work with the two major parties, pasok and new democracy. and that's why these two big parties have been piling the pressure on the leader. he has three day it is to form a coalition government. whether he will be successful, that's a completely different story. if greece's parties don't find a collision government unlg may 17th, we'll see new elections likely in june. june 17th has been named as one of the possible dates for a new round of elections, but whether that outcome will it actually be

more conclusive, that remains to be seen, as well. we spoke to head of the iaf this morning and he basically said let's just be a little more patient with regards to the outcome of these elections last sunday. take a listen. >> when the dust settles, we'll find a government coming together, either a new coalition or a technocrat tick government, that will have little choice but to persevere in many aspects of the economic reform program. >> he made a very important point also with regards to the huang recapitalization of the great banks. he said without credit growth, it this can't be any overall growth. that's why the bank recapitalization immediates to be accelerated. but with this increasing political uncertainty, i don't see how this can happen. >> okay. that's the latest in greece. stefane is in paris.

we're hearing about pressure already coming from germany. the question is whether that's counter productive or not. >> pressure even before the official meeting between angela merkel and francois hollande. he'll travel to berlin next wednesday to meet the german chancellor. if you remember on sunday, hole hand oig said that austerity was not the only way in europe and he called for an agenda to focus on growth. yesterday spokesman for angela merkel replied sgerm any will not support renegotiation of the fiscal compact because it's already signed by 25 countries in europe and also that germany would not support any growth hish difference based on additional deficits basically, no change on that point. germany believes that only structural reforms could fuel long term growth for european countries. angela her kell and francoisle hollande wants to avoid a clash and stay diplomatic before their

first meeting. on the german side, a spokesman confirmed that her kell was waiting for hollande with open arms. in the meantime, we have some comments from the head of the euro group, not surprisingly supporting a german plan for austerity. this is the hard line in europe. but that's perhaps the compromise that we could see. he said we could set up some growth initiative in europe even if it's not part of a proper treaty. that's programs the compromise we could see between france and germa germany. so the first meeting between hollande and merkel next wednesday. >> all right. thanks for that.

just remind you that interview is on our website at cnbc.com. the imf is shifting its tone over austerity after christine lagarde said she was aware that bringing budgets under control could affect growth. lagarde said countries should focus on fiscal measures rather than targets a and that achieving the right pace for cut backs is essential. still with us is ken. i want it get your take on christine lagarde's statement. the people in europe really pushing back. >> as far as us a terry goes, everybody knows they have to do it. the question is at what pace do you do it. if you ram it down people's throat, it causes indigestion. and one of the interesting things about the elections over the weekend is that maybe people now will feel like they have more of a stake this will it, that their voice is heard and maybe accept some of these programs a little bit better.

but won't be all about austerity for them or everyone n us. it has to be a balanced roach. if you don't push these things in slowly on countries can can back and grow their economies, you won't get the desired result you want down the road anyway. so saving all the money in the world isn't going to help you if your economy isn't ultimately going to grow. >> sometimes the change that we want and the change that we actually get are two defendant it things. so are you worried about the new leadership and what and he emerging out of europe and like you said being able to achieve that growth? >> i think it's too early to worry about them because they haven't done anything yet and we're certainly seeing this greece that they're still trying to settle on what that leadership will be. i think the lesson here is that what works on paper, the textbook, the college program of just cut spending and austerity and in the real world face as lot of problems.

and no battle survives the first bull loet shot and we're seeing that with the austerity program. and now we'll get a new version which is this kind of hopefully a pact between the population that says, okay, now you've heard our voice, we have a stake in the game. now let's talk. so hopefully that's one of the benefits that comes out of this weekend and could be a real big positive and why the market didn't sell off as big as we thought yesterday. squh. >> and also an election here in the united states, as well. when we talk about eliciting change and bringing about some of the reforms that we're looking for here, do you worry that the lame duck congress, the situation that we're in, will sort of stall progress here and stall our recovery? >> actually, i'm counting on them to be our hero. the avengers was a box office bonanza. in real life, it looks like the lame ducks are our best shot of having a super hero for our economy because after the elect when our elected officials aren't worried about how a

particular vote will immediately affect their leblt ability might actually do the work we hired them to. the irony is that a number of the people we'll be counting on have just been fired if they didn't get reelected. so probably not a great way to run a country or a company, but the reality is we have such as ben bernanke called massive financial cliff looming over our head come january 1st with all the things that need to be done. bush tax cuts, everyone knows the list. that it's our best hope and that's kind of sad that we've gotten to the poents in in this country where the political environment made the lame ducks our best hope of kind of moving forward and not crushing our economy. >> okay. interesting way to look at it. thank you so much for that. ken will stay with us for the remainder of the show. meantime, coming up on "worldwide exchange," munich re swings back into profit in the first quarter. details coming up next.

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welcome back to the show. let's get and you check on the u.s. futures. looking like it will be a lower open. if the markets were to open, the dow would be lower by 55, nasdaq by 13, and the s&p 500 by 7. of course we did see a mixed

session on monday with relatively low volume. indices sitting at key levels. dow around 13,000 again, z in a dab slightly under 3,000 and the s&p 500 at 1370. and some of the big movers, bank of america and disney, helping the dow a little bit yesterday while the strength in financials was helping the s&p a little bit higher, as well. the nasdaq logging its first gain this these days, but it was only slight. just above the flat line there. how are we looking in europe? >> off the session low, but we are down ahead of the u.s. open. ftse 100 closed yesterday, down just about eight points at the moment. hsbc swung around to that helping that outperform. cac 40 down 1.6%. ibex down a quarter of a percent. in terms of some of the socks certainly in focus, kpn taking the stop spot up nearly 19%.

and also we've seen spanish bank in focus. chairman stepping down may pave the way for a spanish bailout of that sector. we saw german bond yields yesterday hitting just about all-time lows. 1.554%. just above that at the hospital. spanish yields still contained below 6%. italian debt also contained below 5.5%. euro-dollar, we dipped below 1.30 during the session yesterday. back up above it this morning, although off on the day at 1.3025. dollar-yen below the 80 mark. pretty unmoved as you can see. aussie dollar has weakened over the last few sessions. sterling-dollar currently at 1.6134. still retaining gains there last week. >> interesting how the

australian dollar certainly seems to have quite a bit of resilience and also holding above that 1.01 handle, as well. australian bond yields ten year notes yielding just around 3.44, still close to about 60 year lows. remember, we're looking out for that budget how longment this just about ten minutes time or so. we could be getting the sharpest fiscal contraction in 25 years. looks like a lot of the news has been priced in and a lot of it has in fact be flagged to the media, as well. take a look at the down side are from greater china. an overhang coming are from the property space given sales volume continues to decline. the hang seng extending its losses further from that big tumble that we saw yesterday, the biggest single day tumble in six months. hsbc on the other hand closed up half a percent. decent earnings will certainly impact the hong kong session. hsbc actually trimmed its earlier gains. up by more than 1%, but

investors took profits, as well. that will do for me and the rest of the team here in asia. we'll be back with much more tomorrow. thank, chloe. here in europe, munich re is back to profit this in the first quarter thanks to a drop in damage claims. patricia has who are details in frankfurt. >> but it's not enough. yes, they are make profits, however here the thumb 194.6% and the market wanted 93.7%. so really picking at the moment at the stock. but it was at least a profit being booked.

what i thought was interesting is the comments from the cfo saying that they're not expect to go launch any kind of big acquisitions, but also that one is well advised to continue to invest in safe haven government debt. so that is something that he's definitely liking. also putting a number on the u.s. in april, the maximum amount is a high double digit million. they never give us details on that. but important how much the damage did cause in the first quarter. about $264 million. and that their exposure to greek can at the time is still around about 100 million euros. >> thanks, patricia. and still to come, credit cards and even cash may soon be a thing of the past. find out how one company is dealing with the move to a cashless society.

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how long before cash becomes a thing of the past? to keep ahead of the trend, it's launched a new service that allows customers to securely pay with a click of the mouse or tap of the smart phone. joining us is the ceo.

there are many sort of i guess mobile wallet payment systems out there. are you catching up or are you actually getting ahead of the game? >> we're absolutely getting ahead of the game. mastercard is leading innovation because there's lots of different systems and channels out this and what mastercard is doing by launching and i pass wallet services is joining them up. this is an overarching infrastructure that you allows other wallets and other cards and accounts to come into the mastercard pay pass wallet. >> will that include google wall head when they launch or are they a big competitor? >> mastercard recognizes that its consumers and retailers want choice. so it this service is open to our competitors as well as our customers. >> i was wondering how much traction you're gaining with this thus par. a l far. a lot of consumer worries about using a credit card because it's easier to swipe versus taking

cash out of your wallet. will an application like this make careless spending more persuasive? >> the first part of your question was what traction are we getting. we're launching the service today in the u.s. and bringing it it to the uk and other key country around the world. in terms of the pervasiveness point that you raised, this replaces the same experience as you have currently with your credit card or with your mastercard card. so it will be secure with you much more simple and speedy it for customers. >> i have a question. in a world where in the united states where having the 1% versus the 99% debate, if you will, how does something like this ultimately not create the world of the haves and have nots, people who have the ability on access credit or have a debit card, people that in a more cash mentality, it seems that it can really disenfranchise those without access to these tools, smart

toys and credit. >> we recognize that at mastercard and have a range of services that appeal to all societies, including the unbanked. what we're launching here today is to ease the purchase at point of sale online or with your mobile phone. and indeed you'll see that mastercard's launched a range of prepaid cards which even radios out to those that are not in the bank community. enabling all to connect and all to purchase simply and securely. >> they sell the same story, mobile phones have become things that we pay with. how many systems can we live with is this how many competing systems sort of can we -- will we have a mastercard system and via system some because it's all embedded with the banks and the financial transactions business. swl you're right. the purpose here is that

payments need to be ubiquitous. you don't bt with a to have to worry about which service, which net work i'm using. and unlike our competitor, mastercard's taken this open approach. so retailers can brand it with hair brand and we welcome competitors wallets to come into ours. so if you as a customer has that ubiquitous experience. so what master card is doing is leading innovation with this infrastructure to connect all those various systems and channels that are there today. >> all right. we'll see how you're getting on. thanks very much for coming on. jackie. coming up on the show, our next guest says investor confidence has yet to kick in to gear and if there's no major negative new, we could be in line for a market melt up. we'll discuss what's behind his views and get strategy ideas. 

in the united states, morgan stanley warns it may have to cough up a rot more cash to cover the impact of a possible deep downgrade by moody's. >> in europe, hsbc shares reverse losses after underlying profits beat estimates by a billion dollars and the bank reports it's making significant head way in reducing costs. >> and the prospect of fresh elections hooms large in degrees ig after conservatives fail to form a coalition.

the radical left leader is handed the task, but analysts doubt he'll manage to garner must have support. >> matt, they're planning to get back to a balanced budget, something many other countries can only dream of. >> that's exactly what they have eye done. coming through as expected for the 2012/2013 fiscal year with a budget surplus of $1.5 billion which is unchanged from the outlook that they gave back in november. going forward they say they'll achieve a surplus of $2 billion in 2013, 2014 and a surplus of 5.3 billion us a railian dollar this is 2014/2015.

but they've said they managed to achieve $33.6 billion in saving measures when it comes to the budget that they've unveiled tonight for the 2012/2013 fiscal year. so quite a lot of cuts that we've had come through. in terms of the current fiscal year that we're in, the deficit $44.4 billion which is about $7 billion worse off than the stemts that they gave back in november, in terms of some of the other commentary that we're getting out, as well it they say that they see net debt peaking at 9.6% of gdp in the 2011/2012 fiscal year declining to 7.3% by 2015-2016. the aussie dollar weakening slightly on the back of this. but all in all hose are the budget numbers that we were waiting for coming in in line with expectations.

>> more of a political stunt because they clearly don't need to balance the budget with where they stand elsewhere. matt, thanks for that. jackie. >> let's take a look at the u.s. futures if you're just joining us. looking like it will be a lower open. the dow could be lower by 63 points, nasdaq by about 15 1/2 and the s&p 500 lower would i just about 8. this after a mixed session on monday, we had low volume, but we did close higher than our session lows. so that was a positive sign will. in terms of some of the leaders that we saw, bank of america, kiss any helping the dow with its gains. also seeing technology make a bit of a rebound. >> we're down ahead of the u.s. op open, hsbc underlie profit of 6.8, helping it outperform.

xetra dax had a technical glitch earlier. ibex and smi down half a percent. >> and as we said, it was a mixed session here in the u.s. yesterday as investors consider what exactly the weekend elections in europe may mean for the future of austerity measures. joining us to talk who are about the markets is the president of global trend investments and editor of event tf trends.com. ken, we're sort of treading water seems and i pointed that out before. the dow just around 13,000, nasdaq just under 3,000. and the s&p 500 at 1370. we've seen this game before. where do we go there here? >> you're right, the good news is most of the markets are still firmly above their 200 day average, which is a critical technical point as we all know.

the other thing is so far year on date compared to the last couple year, volatility for all intents and purposes has dried up. which means the average investor who really was i guess a bit tenuous about the market the last couple years has exiteded. we've seen over a trillion dollars go this to the fixed income markets, into bond mutual funds and etfs. and with that, a lot of confidence is very, very low. now as we enter may and many people say when you come to may, go away, it's worked pretty well in the last couple of years. the question is will that be the same case as we look forward the next couple of months. >> in the tease, they talked about your idea of a market melt up and you referenced all the huge amount of cash sitting on the side lines. is your thesis more on the fact that this money is on the sidelines earning nothing and has to come out to play or that we'll see corporate fundamentals increase to such a point that it

will convince people that it's time to come out to play? >> i think in both cases you're higt the nail on the head. if you look at earnings, so far for first quarter, 70% has exceeded expectations as far as earnings reports are concerned. which has been tremendous and nobody's talking about it. a lot of eyes are on the european elections. not only that, this has been continuous for the last 13 quarters. better than expected earnings. and the fact that confidence is so low and the fact that there's so much money on the sidelines, there have been press department in past period abouts of time where people get so scared that that's really nowhere else to go, they go to the fixed income markets and then from an interest rate standpoint and then you don't understand as we start to see rates creep up when the markets recover, there's a big shift out of fixed income back into equities and i think by the fall, that's a scenario

that could come to pass. >> this is ross. day your point about better than expected earnings, but that's history. isn't it more important there were an awful lot of guiding up. >> but it happened last quarter, as well. we know most publicly traded companies are being very, very conservative about earnings guidance going forward. they want to be in in the situation where they can surprise. it just does nothing but help them out. i think we'll continue to see that as we go into the the next quarter. >> okay. tom, stick around. more to come from you and ken. we're focusing here on spain. we have spanish government denying that the bank has been taken over. the chairman stepped down potentially clearing the way for a bank deal. but they say it seeks to improve

corporate governance after the spanish media has been reporting that they might offer incentives to help troubled banks sell their toxic assets. madrid is considering a numb incentives for entities that buy impaired assets and the head will of the institute of international finance has warned against putting too much pressure on banks. >> the deleveraging process is increasingly worrisome and should be put on hold for a period of time so that the pressure to rebalance levels of capital can be eased and the credit activity can start growing again. >> hsbc reversed direction today after numbers for the first quarter showed and underlying profit of almost $7 billion. europe's biggest bank boosted by

rebound in investment banking income as well as a fall in bad debt state side. cost saving ratios better than investors had expected. so just one of the reasons why the ftse 100 is outperforming the rest here in europe. >> meantime morgan stanley says it will have to cough up an have a $7 about.2 billion in collateral if moody's cuts the bank's credit rating. that's 50% more than the company's previous estimate. in february, hoodeddy's put more began is anly and other u.s. banks on review for a possible down grade citing issues in their capital markets business. who are began could cut as much as three notches to just above junk status. downgrade could hurt morgan stanley's derivatives business. analysts saying fixed income revenue could be cut by a third. taking a look at shares, they are higher in europe today by about 2.7%. 12.37. also the general accountability

office says that u.s. taxpayers may actually make more than $15 billion on aig's bailout. the gao says that depends mostly on the overall health of the company and the government stake. the treasury department sold $5.8 billion in aig shares monday, 750 hemillion more than expected. shares of aig trading higher by 3%. and also richmond fed president jeffrey lacker says more monetary easing probably won't do much for the u.s. job market which is troubled by long term structural issues. lacker says investing in training and he heducation woul who are beneficial. he says a severe european recession while not likely could hurt u.s. growth. >> and with no outright victory in greece, we could be facing re-election there is in a matter of week.

we'll have the time line for you. you. >

are you still sleeping? just wanted to check and make sure that we were on schedule. the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. politics still very much in vogue here in europe. hollande already feeling the pressure. a number of reports suggest he's

urged to uphold europe's budget pact and at the same time just after we had an election, we could be head willing for a fresh round in greece after the shock vote over the weekend that produced no outright winner. carolyn, what's the next go? >> let's be frank here. greece's political parties really don't have the best record of working together and finding a consensus, so the prospect of yet another round of election elections in june is increasingly likely. but before that, the radical party has three days. if it fail, the mandate gees to the socialist party. if the parties don't find a coalition government by may 17th, elections are likely to be called. but again, a lot of it depends on when the radical left party will drop its opposition to work with new democracy and pasok because they together don't have a majority in parliament.

the big risk here, if we have elections in june, that only drags out the every implementation of saausterity a that puts in to question the next payment of aid by the imf and greece really didn't have a whole lot of time. officials have suggested greece is running out of cash by the end of june. back over to you, jackie. and coming up next, can disney avenge car ter? ñ# [ male announcer ] this is the at&t network... a living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud

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shares of kpn have jumped higher after an offer for up to a 28% stake. the cash offer of eight euros per share represents a premium of around 23% to kpn's closing price yesterday. kpn stocks have been hit by a string of problems. the company is currently undergoing investigation for price fixing. elsewhere yahoo! coe scott thompson says he's saer for mistakes about his educational background in his official bio. thompson made the apology in a memo to employees monday. lobe is demanding his resignation and the board met monday afternoon to discuss the matter. the stock as you can see just down slightly in frankfurt.

>> electronic arts fourth quarter profits more than doubled thanks to the sale of its you new effect video game. but lost on its star wars online game. the company has invested more money into star wars than any other game in its history. analysts say people are playing the game, but they aren't staying with it. so we saw ea fall 5% in the after hours session. and amc entertainment is in talks to sell all or part of the number two u.s. theater chain to china's wanda group. a deal could be worth $1.5 billion. talks began more than a year ago, but picked up recently after amc dropped plans for an ipo. amc as been opened since 2004 by a group of private quit i firms. wanda reportedly accounts for about 15% of china's media ticket sales. and a month ago, they were bitter rivals. today at least publicly they're

the best of friends. rick santorum is endorsing mitt romney. santorum dropping out of the race lost month and helping his supporters help deny barack obama a second term. there's no major economic data here this the u.s. today, but dallas fed president richard fisher is speaking about ways to strengthen the economy. and meantime media companies direct tv and discovery communications are will report results before the opening bell as well as wendy's. after the close, we'll hear from disney and make sure to tune into closing bell for a first on cnbc interview with bob iger at 4:10 p.m. still with us to talk about the trading day ahead is president of global trend investments. tom, let's talk about disney earnings. all ice will be on this company

today. looking at it as a barometer for the general economy here in the u.s. and about consumers are spending an feeling better about things. >> i didn't though we were going to talk about disany, but i'm glad we did. yesterday i picked up my 14-year-old from volleyball practice, the first thing he said was, dad, did you you hear about avengers? it killed it at the box office this weekend. my friends say it's the best you've have i ever. so if that's any indication, i think -- we're right here in southern california, a great heck came for the movie industry. i think it's a great segue in to better earnings going forward. and surely disney needs it. >> definitely going forward, but they've also had some issues, john carter 2409 doing so well. so it will be interesting to see how that impacts the earnings at least for this quarter. but of course we'll be watching that. also i want to get your take on the nonfarm payrolls number that we saw on friday. investors kind of shrugging that off, as well. your take on the number and the gravity of it.

>> from a payroll standpoint, it's the number one thing we're looking at here in the u.s. and jobs, job, jobs. we can't talk about the importance of that here in the u.s. but more importantly, from a housing standpoint, jobs is an point, it's been so much better than the last couple of years. and i don't actually have the number misfront of me, but i think moving forward, i'm very optimistic. >> the only problem i see with the jobs number, i shouldn't say the only problem, the wig problem is that the headline number doesn't really reflect what's going on. we're seeing so many people drop out of the rolls of the people even looking for employment that they're not counting them in those numbers anymore. so if you counted everyone that's stopped looking plus the unemployed, brings the number up to about 14.5%.

and i think that's the underlying problem we as a country need to deal with. we're not going to see housing start to increase until people start feeling more confident. we're not going to see businesses start to hire again and certainly at the small business level until they start feeling comfortable. and it goes back to what we said earlier, there is such a wall of uncertainty about tax legislation come the end of the year that you're seeing this dichotomy of large companies hoarding cash and their balances are doing great because of the uncertainty not spending the money. on the other hand, small business and construction which is the engine of growth it for employment, they're holding it close to the vest and not spending money either. so we really need clarity. >> you bring up a good point when you talk about the situation here in the united states. when you put will global con ex-everyone ex context everyone is looking to the u.s. so if we're not seeing the kind of signs that we need to see about economic recovery, what does it tell us with the rest of the year in terms of the global economy? >> we're actually seeing

corporate balance sheets do better. so we're seeing from an equity point of view a recovery very much taking hold. the problem is it's really not squaring with the employment number. >> if it they're not hiring, as long as they're keeping it tight and close to the vest, it will be a problem. so when does that floodgate open? >> i think one of the problems that we as a society have to deal with is whether our workforce is educated to the right level for the jobs we have available and how technology might be inning to displace people. especially now as technology makes the service sector more efficient. in the 90s, technology made the manufacturing sector more efficient and outsourced a lot of jobs to robots, if it you will. now it's going to be the service sector. >> before we let you go, nasdaq 100 now so heavily loaded up with apple, how much of a problem is that for e tchtf pla? >> it's actually helped. and there are some etfs that are

heavily on the nasdaq 100 loaded with apple. there are also technology etfs that are equally weighted. so to that degree, if you're an apple fan, you have a kois. on the other hand from a technology standpoint, will there are equally weighted etfs. bottom line, etfs have brought a lot of positive options for investors today. the fact that they've got lower costs, lower turnover, lower tax implications, investors have been moving out of mutual funds into etfs. >> all right. tom, we'll have to leave it there. great to have you with us as well as ken. and that pretty much wraps it up here for "worldwide exchange." i'm jackie deanxioudeangelis in united states. >> and i'm ross west gate in europe. have a profitable day.

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it's tuesday, may 8th, 2012, "squawk box" begins right now. >> welcome to "squawk box." i'm andrew ross sorkin along with joe kernen. becky is traveling back it omaha and she'll be back tomorrow. so mandy drury is joining us.